Background: Volvox carteri (V. carteri) is a multicellular green alga used as model system for the evolution of multicellularity. So far, the contribution of small RNA pathways to these phenomena is not understood. Thus, we have sequenced V. carteri Argonaute 3 (VcAGO3)-associated small RNAs from different developmental stages. Results: Using this functional approach, we define the Volvox microRNA (miRNA) repertoire and show that miRNAs are not conserved in the closely related unicellular alga Chlamydomonas reinhardtii. Furthermore, we find that miRNAs are differentially expressed during different life stages of V. carteri. In addition to miRNAs, transposon-associated small RNAs or phased siRNA loci, which are common in higher land plants, are highly abundant in Volvox as well. Transposons not only give rise to miRNAs and other small RNAs, they are also targets of small RNAs. Conclusion: Our analyses reveal a surprisingly complex small RNA network in Volvox as elaborate as in higher land plants. At least the identified VcAGO3-associated miRNAs are not conserved in C. reinhardtii suggesting fast evolution of small RNA systems. Thus, distinct small RNAs may contribute to multicellularity and also division of labor in reproductive and somatic cells.